OIG Blog Entries from September 2012

The U.S. Postal Service recently reported that its third quarter delivery service performance results marked “all-time record service performance” across all mail categories. In particular, the Postal Service had significant improvement in delivery performance for its commercial mail products in First Class and Standard Mail. Periodicals’ on-time performance topped 80 percent for the first time since 2010, a major improvement over the 46 percent score from earlier this year.
The improved service performance in the third quarter occurred while the Postal Service was in the process of consolidating 46 facilities, which some mailers feared would affect service. But initial reports suggest service has not been overtly disrupted by the consolidations, although the real test could come during the fall and holiday mailing seasons. The Postal Service recently completed this first phase of its network rationalization plan, and is now on a break from consolidation until 2013 after the election season.
Postal officials have attributed the improvement in service performance to diagnostic tools that show “pinch points” and help managers to act on that information to reduce cycle times. The Intelligent Mail Barcode full-service data, which identifies many potential problems, is also helping and employees are doing outstanding work often under difficult circumstances.
It will be important for the Postal Service to maintain strong service performance as volumes pick up during the fall mailing season and election mail is added to the mix. Further, the second phase of consolidations could begin in February 2013 and could have an impact on service. Finally, mailers report that they are not solely concerned with service scores but that the Postal Service delivers the mail as promised.
What has been your experience with service over the past few months? Have you been affected by the consolidations? Are you concerned about phase two of the network consolidation plan?

Many international postal operators pay corporate income taxes to their national treasuries. Similar to a private company, these payments appear in the postal operators’ financial statements. Countries whose postal operators pay corporate income tax have essentially made a policy decision: They want their postal service to behave like a private business. This may not be surprising in solidly capitalist countries, such as the United Kingdom, Japan, or Taiwan, but many of these posts are from countries with long histories of centrally controlled economies, such as Armenia, Slovakia, and Croatia.
The concept of a corporate income tax is not entirely foreign to the U. S. Postal Service. The Postal Accountability and Enhancement Act requires the Postal Service to compute its assumed federal income tax on the income earned from its competitive products each year. Rather than paying that income tax to the Treasury, however, the Postal Service essentially pays itself. The money is transferred from the Competitive Products Fund to the Postal Service Fund, and can be used to fund the postal network as a whole.
Corporate income tax does not necessarily imply privatization either. The postal operators of Germany, the Netherlands, Malta, and Singapore all pay corporate income tax and all are publicly traded corporations. The remaining operators that pay corporate income taxes are, in essence, state-owned.
One advantage of the use of corporate income taxes is that the payments to the national treasury are tied to the financial performance of the postal operator. Corporate income tax payments decline during downturns in the business cycle and increase during periods of prosperity. Another advantage is the fact that these national governments have a stake in the sound financial management of their postal operators. In short, they have skin in the game.
What do you think? Should the Postal Service pay a corporate tax? Would such a tax encourage a more business-like approach to managing the Postal Service? Or does its public service mission and its current universal service obligations make a corporate income tax unworkable?

More than 1.4 million Americans serve in the military, with about 200,000 of those troops serving overseas. Members of the armed forces can feel isolated while deployed, often in dangerous conditions. The military discovered long ago that mail boosts the morale of troops serving in other parts of the world, so it has made military mail a high priority. Military mail provides members of the armed forces with a vital link to their communities. As the “Mail Call” exhibit on military mail at the Smithsonian’s National Postal Museum notes: Mail call is the moment when the frontline and home front connect.
The U.S. military mail service requires the coordinated efforts of the U.S. Postal Service and the armed forces. The current system has essentially been in place since World War II. The Postal Service is responsible for transportation of mail from U.S. postal facilities to overseas military facilities, between domestic postal facilities and air or surface carriers, while the Department of Defense manages and pays for transportation abroad and the operation of overseas military post offices. The military mail system is an extension of the domestic postal system, meaning senders of mail to Army/Air Force Post Offices (APOs) and Fleet Post Offices (FPOs) pay domestic postage rates. Over the years, the government has granted free mail services for soldiers serving in active combat sites.
With the same goal of boosting morale, the U.S. Department of State, under Congress’ authorization, began establishing diplomatic post offices (DPOs) in the early 2000s. Initially, DPOs were set up for diplomats serving in hardship posts, but the State Department has since expanded the DPOs beyond such posts. Like APOs and FPOs, the Postal Service is responsible for the domestic portion of the service.
The anniversary of the September 11 terrorist attacks reminds us of the importance of the armed forces and the diplomatic corps to the country’s well-being and standing in the world. The long and rich history of the military mail service is a unique, collaborative effort among parts of the government, working together to serve their public mission. For the Postal Service, military mail is an exemplary depiction of binding the nation together. To the troops and diplomats who serve overseas, it is more simply “mail call” – it is their connection to home.

I appreciate that Uber has disrupted the taxi industry and injected some much-needed competition into it, which only benefits consumers. But the move to the Uber model of surge pricing in other industries is disappointing. Consumers are already...

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